While local brick and mortar banks will always be common, online financial institutions are picking up a lot of steam. Over the past five to ten years, online savings accounts have become more and more popular.
Why do so many people rely on online savings accounts? The main reason for this is simple: higher interest rates than local competition.
On the surface, all online savings accounts appear the same. But once you dig deeper and learn more about the finer details you will find that no two banks are identical.
Below are five key steps to consider when choosing an online savings account:
Interest Rates
When evaluating an online bank it is essential to consider the interest rate. Even though online savings account rates can and will fluctuate with time, some banks are known to be among the best regardless of what is going on with the economy.
You want to look for two things when it comes to the interest rate:
1. Which bank is highest right now?
2. Which banks are known to raise their rates first and lower their rates last?
Safety and Security
Let’s face it: in today’s day and age, many people are worried about whether or not their money is secure. This is particularly true with so many banks “going under” over the past few years.
Generally speaking, as long as a bank has FDIC insurance you are safe. That being said, make sure you know the FDIC limits and that you stay below them.
What about security features? The online bank you choose should have a secure login area. Along with this, it is your responsibility to keep your password safe and to only login on computers that are 100 percent secure.
Interface Simplicity
The last thing you want is an online savings account that you don’t understand. Remember, there is no local branch for you to walk into for assistance. What you see when you log into your online account is what you get. While you can always call customer service for support, doing so time and time again will get old.
Find an online bank that is known to offer a simple interface with basic functionality and features. ING Direct, for example, is a favorite among many people. Not only do they have a simple interface, but they have made it very easy for users to create sub-accounts.
Minimum Balance
How much money are you going to put in your online savings account? Will this money stay put indefinitely? Some banks have a minimum balance requirement, others don’t. This may or may not be important to you depending on how much money you have.
What is the big deal? If you have a minimum balance requirement and don’t stay above the threshold you could find yourself paying monthly fees. Along with this, your interest rate may dip.
If you don’t have enough money to keep the required balance, search for an online bank with no minimum requirement.
Customer Service
This is a giant detail in the process of selecting an online savings account. As noted above, you don’t have the ability to walk into a local branch and speak with somebody face to face. For this reason, it is essential that you can get customer support when needed, therefore head over to Bank Reviews and Ratings to find customer reviews on prospect banks.
If you choose the right bank you will have access to a live person via phone or online at pretty much any time of the day. Believe it or not, some banks even have 24 hour customer service teams.
When a question or problem arises, you don’t want to wait too long for an answer. After all, it is your money and you deserve to know what is going on with your account.
As you take the necessary steps to open an online savings account, strongly consider the five details outlined above. If you take your time during the comparison and selection process you will be confident in your final decision.
Final Word
No matter who you are, when opening an online savings account you should follow these steps. Along the way, if you have any questions you should stop and seek out the appropriate answer. You can search the internet for information on each online bank. Along with this, don’t overlook the ability to contact a live customer service representative via phone.
Congratulations! You are now in position to choose the perfect online savings account.
